EU Trade Chief Outlines Possible Areas for Updating WTO Rulebook

28 April 2016

EU Trade Commissioner Cecilia Malmström outlined on Tuesday a series of topics which, she suggested, could be constructive areas for future discussion as WTO members brainstorm how to move forward in a “post-Nairobi” negotiating landscape.

However, she warned against getting “bogged down” in debates over whether the Doha Round – the series of negotiations which WTO members have been undertaking since 2001 – is alive or dead.

“What matters is that many of the issues within the Doha Development Agenda are as relevant today as they were in 2001, if not more so,” she said, particularly given that some topics are best addressed at the WTO level rather than in bilateral or regional deals elsewhere.

Indeed, whether or not to reaffirm the Doha Round negotiating mandate was one of the top issues during the WTO’s last ministerial conference, held in the Kenyan capital of Nairobi last December. Ultimately, after days of round-the-clock negotiations, ministers ultimately agreed to disagree on the subject. (See Bridges Daily Update #5, 19 December 2015)

The ministerial declaration adopted in December instead noted the opposing viewpoints on the Doha Development Agenda and subsequent ministerial conference declarations and decisions. While some reaffirmed “their full commitment to conclude the [Doha Round] on that basis,” others argued for “new approaches” to reach meaningful, multilateral results.

The result has left trade watchers and negotiators alike mulling over what this will mean for the future of the trade body’s negotiating arm, both in the year ahead and further down the road.

Multilaterals first – otherwise, plurilaterals

Speaking at a meeting with civil society on Tuesday, the EU trade chief stressed that the 28-nation bloc’s preference remains with concluding multilateral deals at the global trade body, particularly given the WTO’s large membership.

Noting the various changes seen to the international trading landscape over the past 15 years, Malmström cautioned that the organisation’s rules have “major gaps,” and also called for realism moving forward, even with the preference on multilateral deals.

“If it’s a choice between making progress with a smaller number of partners or no progress at all, then we will choose to move forward – plurilaterally,” she said, adding that the priority would then be plurilateral deals on a most-favoured nation basis.

In other words, these would be deals whose commitments are adopted by their participants, but whose benefits would extend to the entire WTO membership.

These would also be “open to others to join in the future and can use WTO dispute settlement,” she said. Closed deals, by comparison, would be a last resort should open approaches fail.

Priority on rulemaking

Notably, the EU trade chief indicated that the 28-nation bloc’s priority in its WTO strategy would be on setting new rules, and less on market access, though the latter remains important.

“We should focus our immediate attention on where the WTO can provide the biggest value. And that is rulemaking, especially in the new areas where no global rules exist yet,” she said.

Even so, Geneva sources note that a recent informal meeting of the WTO’s negotiating group on market access saw some members back the idea of plurilaterals in the area of industrial tariffs, while others were pushing either to continue market access talks in the WTO and still a third group is either “indifferent towards further work on NAMA issues at this stage” or otherwise are defensive in the interests of preserving existing policy space.

According to remarks by the meeting’s chair, Swiss Ambassador Remigi Winzap, members are currently “in a brainstorming mode” when it comes to market access and seem to “still be looking for a foothold in the post-Nairobi discussions.”

Agriculture, digital trade, investment

Malmström said on Tuesday that, in her view, the types of issues that appear to have support from fellow WTO members fall into three camps.

One camp involves domestic agricultural support, digital trade, and investment – areas which she deemed as having “strong importance to the system.”

Indeed, regarding agriculture, the chair of the WTO’s farm trade talks said in February that this area could be “key” to a negotiating outcome for the organisation’s 2017 ministerial conference. (See Bridges Weekly, 10 March 2016)

Vangelis Vitalis, the New Zealand ambassador chairing those talks, is due to soon report back to WTO members on the outcomes of his latest consultations, sources say. An informal, open-ended meeting of the WTO’s “special session” on agriculture is set for 10-11 May.

With the other two topics, Malmström noted in particular the interest seen from China, one of the world’s largest trading powers. Investment had been one of the “Singapore issues” that were discussed in working groups following the 1996 Singapore Ministerial Conference, only to be dropped in 2003 after members were unable to achieve consensus moving forward.

The EU trade chief then classed a number of other Doha topics – such as fisheries subsidies, food security and public stockholding, and domestic regulation in services – as also having support, though being “smaller in terms of impact.”

While decisions were adopted in Nairobi regarding public food stockholding for food security purposes, efforts to address the other two areas ultimately failed to bear fruit at the December ministerial meet. (See Bridges Daily Update, 19 December 2015)

Other areas falling in that second camp could include regulatory practices and transparency for technical barriers to trade, as well as subsidies for industrial goods – with Malmström tying the latter to the burgeoning global steel crisis, which has particularly hit EU producers hard.

Indeed, recent talks in Brussels among various countries and industry officials ultimately failed to yield agreed steps forward on the steel overcapacity issue, with some key players such as the US warning of trade action against countries like China and others should the problems persist. Those talks were in the context of a high-level symposium, organised by the Organisation for Economic Co-operation and Development (OECD) and the government of Belgium. (See Bridges Weekly, 21 April 2016)

Again in this second camp of topics, the EU trade chief highlighted three “new issues” where, she said, there is interest among some WTO members in moving forward. These include export restrictions on energy and raw materials; local content requirements; and state-owned enterprises.

Goods sectorals, trade facilitation

While Malmström stressed throughout her remarks that multilateral approaches are ideal, she did flag two areas where plurilaterals may be the only option.

These include sectoral deals on goods market access, similar to the Information Technology Agreement (ITA) and related expansion, as well as taking on additional work on trade facilitation, building on the multilateral pact on the subject reached in Bali, Indonesia in December 2013.

That latter deal is not yet in force, still needing approximately 30 more WTO members to ratify its terms. At press time, 77 members had deposited their “instruments of acceptance” to the global trade body, with the latest being Russia. To come into force, two-thirds of the organisation’s 162 members must ratify it domestically.

Coming up

The EU trade chief is set to hold additional discussions with member states in crystallising the bloc’s position moving forward, as well as with civil society representatives and various other stakeholders. Malmström is also due to be in Geneva – home of the WTO – next week, during which she will give public remarks on “multilateralism and other values in EU trade policy.”

Other major events on the international trade calendar which could provide additional guidance going forward include a G-7 leaders’ meet in late May; the annual OECD Forum and ministerial meeting in late May and early June; and a G-20 trade ministers’ gathering in early July in Shanghai.

Indeed, various informal gatherings held in Geneva over the past weeks have indicated that members are still reflecting on what path they hope to chart forward for the WTO’s future work, with sources noting that many are wary of “drifting” should further clarity and political direction on the negotiating pillar not come soon.

The WTO’s General Council, which is the highest decision-making body outside of the ministerial conference, is also due to meet at headquarters on 12 May.

ICTSD reporting.

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